Brexit is Done: Key issues for UK businesses
We have a Brexit deal – an 11th hour development that increasingly seemed unattainable – but it left the UK business community with little time to get to grips with the immediate and short-term implications.
Now that a UK-EU Trade and Cooperation Agreement is in place, we look at the key issues businesses need to consider as we begin this new chapter outside of European Union rules.
Supply chains
Businesses need to robustly protect their supply chains by identifying any vulnerabilities exposed from 1 January. No doubt, supply chain audits have already been carried out, but these should be reviewed and repeated, particularly as changes arise within the supply chain.
Businesses need to understand the legal implications of their existing contractual arrangements, should there be delays, disruptions and cancellations. How can they secure legal redress; and is jurisdiction and enforcement likely to be an issue?
Covid-19
Businesses are battling not only the immediate post-Brexit issues, but the serious economic and logistical problems caused by the pandemic. Your own business may be in financial trouble, but the likelihood is, so are your suppliers and others within your supply chain.
If problems arise, rather than insisting on your strict legal rights, consider negotiating interim measures (such as changes to payment terms) that will protect both and the other party in the short term and allow for a full resolution of outstanding issues once normality begins to return.
Company law
Now that EU company law no longer applies to companies registered in the UK, what do companies who have operations in the EEA need to be considering? UK-incorporated companies are now ‘third country companies’ for the purpose of EU law, which means they are no longer legally recocognised by EU member states.
Cross-border mergers can no longer take place under the cross-border mergers directive and there are restrictions on, for instance, registrations of Societas Europaea (SEs) and European Economic Interest Groupings (EEIGs).
New filing and disclosure requirements now apply in respect of UK companies which have EEA corporate officers; and EEA companies which have registered UK establishments.
Jurisdiction and enforcement
The Recast Brussels Regulation regulates jurisdiction and enforcement between EU Member States. Under the Hague Convention on the Choice of Courts Agreements 2005 (HCCCA), which replaced part of that regulation, business can elect an exclusive choice of a court in a contracting state, including EU states.
This means that now that the UK is outside of the EU, UK business may now choose the English courts to have exclusive jurisdiction in their contracts - though the relevant contractual clause must have been concluded after 1 January 2021 for the EU to honour that. It may therefore be a wise move to ensure your commercial contracts expressly include an exclusive jurisdiction clause in the event of a dispute.
Consumer law
Brexit has not prompted major changes to UK consumer law, but a couple of issues are worth noting. The ODR dispute resolution platform for cross-border disputes with consumers is no longer available to UK consumers; and the Consumer Protection Cooperation Regulation (2017/2394) has been revoked.
Data protection
The General Data Protection Regulation (GDPR) has global effect in relation to the data of anybody located in the EU. So that means UK-based data controllers or processors who continue to hold data in relation to people who are in the EU are still required to comply with the GDPR.
However, note that if a business has a UK-based appointed EU representative who has no separate establishment in the EU, that business must appoint a representative within an EU member state (and this will cover the business in respect of all member states).
Note that the above is a brief snapshot of some of the key implications following Brexit and specialist legal advice must be taken.
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you